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Considine v. Murphy

Supreme Court of Georgia

June 1, 2015

CONSIDINE
v.
MURPHY et al

Certiorari to the Court of Appeals of Georgia -- 327 Ga.App. 110.

Judgment affirmed.

Cecily Considine, pro se.

Carlock, Copeland & Stair, Johannes S. Kingma, Brian S. Spitler, Christopher J. Hoffman, for appellees.

NAHMIAS, Justice. Thompson, C. J., Hines, P. J., Benham, Hunstein, and Melton, JJ., and Judge Stephen D. Kelley concur. Blackwell, J., not participating.

OPINION

Page 177

Nahmias, Justice.

We granted certiorari to review the Court of Appeals' decision affirming the dismissal of Cecily Considine's lawsuit against the receivers appointed in her separate lawsuit against Michael Affatato on the ground that the receivers have official immunity. We conclude that this lawsuit against the receivers should instead have been dismissed on the ground that Considine failed to obtain leave from [297 Ga. 165] the trial court in her lawsuit against Affatato before filing a separate lawsuit against the receivers appointed in that case. We affirm the Court of Appeals' judgment on this ground, and we therefore vacate the court's discussion of immunity.

1. In April 2008, Cecily Considine filed a lawsuit in the Superior Court of Cherokee County against her former business partner, Michael Affatato. She alleged conversion, unjust enrichment, fraud, and multiple other claims arising out of a bitter dispute over the right to manage and control the assets of a company known as Model Master, which Considine describes as a business " with international presence in engineering and 3D modeling technology." On September 3, 2008, the court entered a Consent Order finding that " the appointment of a receiver pursuant to OCGA § § 9-8-1 through 9-8-14 is necessary to preserve the property of Model Master during the pendency of this litigation." The Consent Order instructed Considine and Affatato to identify a mutually agreeable receiver within 14 days, listed the " limited purposes" of the receiver's appointment, and required the receiver to make a final accounting to the court prior to discharge. The Consent Order concluded:

The Receiver shall have no responsibility to the parties hereto other than to perform faithfully within the directions contained in this Order. The Receiver shall not be liable to the parties hereto for any losses, liabilities, expenses, claims, damages, or demands arising out of or in connection with said performance, except for gross negligence or willful misconduct, as determined by a Court of competent jurisdiction.

Considine and Affatato then executed a letter agreement with certified public accountant George W. Murphy and his accounting firm, Murphy & McInvale, P.C. (M& M), " confirm[ing] the engagement of Murphy & McInvale ... as the Court appointed Receiver for Model Master." The agreement incorporated the Consent Order by reference and repeated its language concerning the receivers' liability. In September 2009, the court entered a stipulation and consent order expanding the receivers' authorization " to include all powers allowed a receiver under Georgia law."

On September 29, 2010, while her lawsuit against Affatato was still pending and without seeking prior approval from the court in that case, Considine filed a separate lawsuit in the Superior Court of Cherokee County against Murphy and M& M, raising claims of gross negligence and breach of fiduciary duty based on their alleged [297 Ga. 166] mismanagement of the receivership; she later amended her complaint to add additional claims. The receivers filed a motion to dismiss under OCGA § 9-11-12 (b) (1), asserting that the court lacked subject matter jurisdiction based on their official immunity and Considine's failure to obtain leave of court in the Affatato

Page 178

case before filing a separate lawsuit against them. The trial court held a hearing on the motion, but Considine voluntarily dismissed her lawsuit against the receivers before the court issued an order.

On October 13, 2011, again without seeking prior approval from the court in the Affatato lawsuit, Considine filed the lawsuit now at issue against the receivers, raising claims of breach of contract, breach of fiduciary duty, gross negligence, and willful and wanton misconduct and seeking an accounting, damages, and other relief. On December 20, 2011, the receivers again filed a motion to dismiss for lack of subject matter jurisdiction along with a verified answer raising as defenses, among other things, official immunity and Considine's failure to obtain leave in the Affatato case to sue the receivers. Eight days later, the trial court dismissed the lawsuit with prejudice, finding that " because Defendants [Murphy and M& M] were acting in their capacity as a court appointed receiver, they are entitled to official immunity [under the Georgia Constitution]."

In Considine v. Murphy, 320 Ga.App. 316 (739 S.E.2d 777) (2013) ( Considine I ), the Court of Appeals reversed that judgment on the ground that the trial court ruled on the motion to dismiss less than 30 days after it was filed, depriving Considine of proper notice and an opportunity to be heard. See id. at 317-318. On remand, Considine filed a response to the motion to dismiss, but on June 5, 2013, the trial court again dismissed the complaint based on official immunity. In Considine v. Murphy, 327 Ga.App. 110 (755 S.E.2d 556) (2014) ( Considine II ), the Court of Appeals affirmed, holding in Divisions 1 and 2 of its opinion that the trial court correctly determined that Murphy and M& M were court-appointed receivers and that Considine had waived her argument that M& M could not be appointed as a receiver because it was a corporate entity. See id. at 112-114. In Division 3, the Court of Appeals upheld the dismissal of Considine's lawsuit against the receivers based on official immunity, explaining that the receivers' duties were discretionary and Considine did not " point to any evidence in the record ... that [the receivers] acted with ... actual malice." Id. at 115.

This Court granted Considine's petition for certiorari, noting two issues with which we were particularly concerned: (1) Under what circumstances is a court-appointed receiver entitled to immunity from suit?, and (2) Did the Court of Appeals err in affirming the trial court's order granting the motion to dismiss based on a failure to [297 Ga. 167] present evidence of actual malice?[1] Upon review of the entire record, however, we have determined that we need not address those issues to properly resolve this case.[2]

2. OCGA § 9-8-8 (a) says, " The receiver is an officer and servant of the court appointing him, is responsible to no other tribunal than the court, and must in all things obey its direction." For almost 140 years, this Court has recognized that court-appointed receivers are indeed " responsible to no other tribunal" than the appointing court for their actions with respect to the receivership, and thus no suit may proceed against a receiver without first obtaining leave of the court appointing him. See DeGraffenried v. Brunswick & Albany R.R. Co., 57 Ga. 22, 23 (1876) (citing a statutory predecessor to OCGA § 9-8-8 (a)). As the United States Supreme Court said five years later in Barton v. Barbour, 104 U.S. 126 (26 L.Ed. 672) (1881), " It is a general rule that before suit is brought against a receiver leave of the court by which he was appointed must be obtained." Id. at 128. See also McNulta v. Lochridge, 141 U.S. 327, 330 (12 S.Ct. 11, 35 L.Ed. 796)

Page 179

(1891) (discussing the " general and familiar principle of law" that receivers may not be sued without prior leave of the court that appointed them); Bugg v. Consolidated Grocery Co., 155 Ga. 550, 555 (118 S.E. 56) (1923) (explaining that " the general rule for generations has been that receivers are not subject to suits of any kind, unless the court which appointed him would grant leave for such suit to be entered" ).

This rule, sometimes called the " Barton doctrine," remains a matter of subject matter jurisdiction in Georgia courts. See Fried v. Sullivan, 27 Ga.App. 326, 327 (108 S.E. 127) (1921) (" While the courts are not all agreed in holding that leave to sue a receiver is jurisdictional and essential to the maintaining of an action, this is not an open question in Georgia." ). In states like Georgia that treat the rule as jurisdictional, the prior-leave requirement applies even to a separate lawsuit filed in the same court that appointed the receiver. See, e.g., Links v. Conn. River Banking Co., 66 Conn. 277, 33 A. 1003, 1004 (Conn. 1895) (" A receiver appointed by judicial authority cannot, in the absence of a statute to the contrary, be subjected to suit without the leave of the court whose officer he is, granted in the cause in which he was [297 Ga. 168] appointed." ). See also R.E. LaG., Annotation, Failure to Obtain Permission to Sue Receiver as Affecting Jurisdiction of Action, 29 A.L.R. 1460 (1924).

The administration of [the company's] estate is in the hands of the [s]uperior [c]ourt ... , but only in the exercise of its jurisdiction over the cause in which the receiver was appointed. [The court] can no more make orders to affect that cause, while sitting to hear another, between different parties, pending in the same county, than if it were a different court, or in session in a different county. These distinctions are not merely formal[; t]hey are essential to the administration of justice. An estate in the possession of a receiver must be administered in the presence of those who were parties to the appointment, or they would be denied their day in court.

Links, 33 A. at 1004.

Considine does not claim that she sought leave from the court in the Affatato case to file this separate lawsuit against the receivers appointed in that case. And she cannot invoke Georgia's limited statutory exception to the Barton doctrine.[3] Instead, Considine contends that the 2008 Consent Order in the Affatato case gave her leave [297 Ga. 169] in advance to file separate lawsuits against the yet-to-be-named receivers, which she then exercised in 2010 and again in 2011 when she filed her lawsuits against Murphy and M& M.

Page 180

Considine bases her argument on the provision of the Consent Order saying:

The Receiver shall not be liable to the parties hereto, for any losses, liabilities, expenses, claims, damages, or demands arising out of or in connection with said performance, except for gross negligence or willful misconduct, as determined by a Court of competent jurisdiction.

This provision, however, addresses the types of claims that Considine and Affatato might be able to bring against the receiver in the future; it does not authorize any claims to be brought in a lawsuit separate from the Affatato case and without leave given by the court in that case. Indeed, given Georgia's longstanding rule, the only " Court of competent jurisdiction" to decide a separate lawsuit against the receivers would be a court hearing an action that a party in the Affatato case had asked for and received leave to file from the court in that case. Thus, the Consent Order did not give Considine leave to file a separate lawsuit against Murphy and M& M. And without prior leave being properly granted, the trial court had no jurisdiction over this separate lawsuit against the receivers. Accordingly, it was right for the trial court to dismiss this lawsuit for lack of jurisdiction, and right for the Court of Appeals to affirm the dismissal, and we affirm the judgment on this ground. See WMW, Inc. v. American Honda Motor Co., 291 Ga. 683, 683 (733 S.E.2d 269) (2012) (affirming the Court of Appeals' judgment on certiorari under the right-for-any-reason doctrine).

3. Our holding in Division 2 makes it unnecessary to decide whether, in a lawsuit filed with the proper leave, Murphy and M& M would have been entitled to some form of immunity from Considine's claims. If this case had been filed with the proper authorization, the trial court, before allowing Considine's claims against Murphy and M& M to proceed, would have had to decide if the claims were barred by judicial immunity,[4] by constitutional official [297 Ga. 170] immunity,[5] or by statutory immunity under the Georgia Tort Claims Act (GTCA), OCGA § § 50-21-20 to 50-21-37.[6] Given our conclusion that this

Page 181

case should be resolved based on Considine's failure to comply with the prior leave requirement, however, we vacate Division 3 of the Court of Appeals' opinion. See Oliver v. McDade, 297 Ga. 66 (___ S.E.2d ___) (2015).

[297 Ga. 171] Judgment affirmed. Thompson, C. J., Hines, P. J., Benham, Hunstein and Melton, JJ., and Judge Stephen D. Kelley concur. Blackwell, J., not participating.


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